Biota sues Glaxo

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Biota chief excecutive Peter Molloy says Biota has only received $1 million in royalties in the last 12 months on Glaxo's sales of Relenza.Picture:Rebecca Hallas

Melbourne biotech Biota Holdings is suing the world's second largest pharmaceutical company, GlaxoSmithKline, claiming it caused sales of the Australian-discovered flu cure Relenza to collapse by not properly promoting the inhaled medication.

Biota issued a writ in the Victorian Supreme Court yesterday, alleging that Glaxo failed to meet its obligations under a research and licensing agreement for the breakthrough flu drug. Biota is seeking unspecified damages and royalties for past and future losses.

Biota chief executive Peter Molloy said Glaxo had left Relenza as "a sitting duck" to be picked off by its sole rival, Tamiflu, in a market that was now valued at $500 million - and that Biota had only received $1 million in royalties in the last 12 months on Glaxo's sales of Relenza.

Mr Molloy said Relenza, discovered by Biota in conjunction with the CSIRO, the Victorian College of Pharmacy and the Australian National University, had been sold short for "a corporate agenda" following the merger of Glaxo Wellcome and SmithKline Beecham in 2000.

On its launch in 1999, he said Relenza had captured 48 per cent of the emerging market for broad-spectrum flu drugs but sales had plummeted to just 3 per cent after the newly merged GSK withdrew marketing and support for the product.

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The Biota chief said it had only moved to sue Glaxo after the recent unsatisfactory end to more than two years of talks.

"Biota is seeking recovery of lost royalties for the past five years and lost royalties over the next up to 10 years for the life of Relenza's patents . . . There is no reason why Relenza couldn't have been a $500 million drug," Mr Molloy said.

A spokeswoman for Glaxo said Biota's court action had come as a surprise.

"We will be considering our position and will provide comment in due course," she said.

It is expected to take a year to 18 months for the case to go to trial. A directions hearing is scheduled for June 18.

Biota is seeking recovery of lost royalties for the past five years and up to the next 10 years.PETER MOLLOY, Biota CEO

Mr Molloy said Biota's share price at the time that Relenza was launched gave the company a market capitalisation of up to $500 million and today it was about $70 million.

Professor Sir Gustav Nossal, one of Australia's leading medical biologists and former director of the Walter and Eliza Hall Institute of Medical Research, yesterday said Relenza was "one of the greatest Australian research inventions of all time. It is a major Australian tragedy that this drug is not being used much more widely."